Theory of Change

Generating social value

TCX’s currency hedging products and services in emerging and frontier markets generate significant social value in those countries by contributing positively to stable economic growth and poverty alleviation. TCX’s activities benefit society through improving livelihoods and the resilience of poor households through the following channels:

TCX’s instruments induce incremental investment through mitigation of risks for investors in key sectors for inclusive economic growth such as infrastructure, microfinance and renewable energy.

TCX’s market-making contributes to financial sector deepening and financial stability. This directly channels into improving financial access and reducing poverty. In countries with low financial development, TCX is the sole provider of currency risk hedging instruments and promotes accessibility to such products. In more developed markets, TCX provides liquidity and augments available products through e.g. longer maturities, thereby deepening the domestic FX markets and developing the local-currency capital markets.

TCX’s thought-leadership and knowledge-sharing raises awareness on risks associated with foreign currency lending, thus making an important contribution to financial stability.

The above is described in more detail, including case studies, in TCX’s Theory of Change. Please find a copy here.